Introduction

Whenever shares or convertible securities of an Indian company are transferred between:

• a resident person, and
• a non-resident person,

the transaction must generally be reported to the Reserve Bank of India (RBI) through Form FC-TRS under FEMA regulations.

FC-TRS stands for:

Foreign Currency – Transfer of Shares

This filing is done online through the RBI FIRMS Portal under the Single Master Form (SMF) module.

FC-TRS is one of the most important FEMA compliances in India because RBI uses it to monitor foreign investment inflows and outflows involving Indian companies.

What is FC-TRS?

FC-TRS is a reporting form applicable when there is:

• transfer of existing shares,
• CCPS,
• CCDs,
• or other capital instruments

between:

• Resident → Non-Resident, or
• Non-Resident → Resident.

Unlike FC-GPR (fresh issue of shares), FC-TRS applies to transfer of already existing securities.

When is FC-TRS Applicable?

FC-TRS is required in situations such as:

1. Resident Selling Shares to Non-Resident

Example:

• Indian founder sells shares to foreign investor.

2. Non-Resident Selling Shares to Resident

Example:

• Foreign shareholder exits Indian startup and transfers shares to Indian resident.

3. Transfer of:

• Equity Shares
• CCPS
• CCDs
• Other convertible capital instruments

between resident and non-resident parties.

Cases Where FC-TRS is NOT Required

Generally FC-TRS is not required for:

• Resident → Resident transfer
• Non-Resident → Non-Resident transfer
• Certain non-repatriable basis transactions

Who is Responsible for Filing FC-TRS?

The responsibility generally lies on:

Resident transferor or resident transferee.

In practice:

• companies,
• CAs,
• CS professionals,
• or consultants

usually coordinate filing with the Authorized Dealer (AD) Bank.

Due Date for FC-TRS Filing

FC-TRS must generally be filed:

Within 60 days from:

• date of transfer, or
• receipt/remittance of consideration,

whichever is earlier.

RBI FIRMS Portal

FC-TRS filing is done through:

RBI FIRMS Portal

under:

• Single Master Form (SMF).

Step-by-Step FC-TRS Filing Process

Step 1 — Obtain Entity User Registration

Before filing:

• entity must register on RBI FIRMS portal.

Details required:

• CIN
• PAN
• company details
• authorization letter
• authorized signatory details

Step 2 — Create Business User

After entity approval:

• create Business User ID,
• link with entity,
• obtain AD Bank verification.

Resident individuals can also register directly in certain cases.

Step 3 — Execute Share Transfer Documents

Prepare:

• Share Purchase Agreement (SPA),
• Share Transfer Deed (SH-4),
• consent letters,
• board approvals.

Company must register transfer in its records.

Step 4 — Obtain Valuation Certificate

Valuation is one of the most important FEMA requirements.

Certificate may be issued by:

• Chartered Accountant,
• SEBI Registered Merchant Banker,
• or practicing Cost Accountant.

Valuation generally should not be older than:

90 days.

Step 5 — Obtain Bank Documents

For inward remittance:

• obtain FIRC,
• obtain KYC report from AD Bank.

These documents confirm:

• foreign remittance,
• investor identity,
• banking channel compliance.

Step 6 — Login to FIRMS Portal

Login using:

• Business User credentials.

Navigate to:

Single Master Form (SMF)

Select:

FC-TRS

Step 7 — Select Transaction Type

Portal will ask whether transaction is:

Pricing rules differ for both cases.

Step 8 — Enter Transaction Details

Fill details such as:

• type of security,
• number of shares,
• face value,
• transfer price,
• consideration amount,
• remittance date,
• transfer date,
• sectoral cap details.

Step 9 — Enter Buyer & Seller Details

Provide:

• name,
• address,
• residential status,
• PAN,
• nationality,
• bank details.

Ensure consistency with:

• KYC,
• FIRC,
• SPA,
• valuation report.

Step 10 — Upload Documents

Common attachments include:

• Share Purchase Agreement
• SH-4
• Consent Letter
• Valuation Certificate
• FIRC
• KYC Report
• Board Resolution
• Shareholding Pattern
• Declaration by Buyer & Seller

Step 11 — Submit FC-TRS

After submission:

• ARN (Application Reference Number) generated.

Application moves to:

AD Category-I Bank

for scrutiny and approval.

Pricing Guidelines under FEMA

Pricing rules are extremely important.

Resident → Non-Resident

Transfer price:

Cannot be lower than Fair Market Value (FMV).

Non-Resident → Resident

Transfer price:

Cannot exceed Fair Market Value.

Wrong pricing may result in FEMA contravention.

Common Reasons for FC-TRS Rejection

1. Incorrect Valuation

• outdated valuation,
• incorrect methodology,
• pricing mismatch.

2. FIRC/KYC Mismatch

Differences in:

• investor name,
• remittance details,
• country details.

3. Wrong Shareholding Pattern

Incorrect pre/post transfer calculation.

4. Missing Attachments

Incomplete documents often result in AD Bank rejection.

Penalty for Late Filing

Delay in FC-TRS filing may result in:

• Late Submission Fee (LSF),
• FEMA penalties,
• compounding proceedings.

Non-compliance may also affect:

• future investment rounds,
• due diligence,
• startup funding transactions.

Difference Between FC-GPR & FC-TRS

Practical Compliance Tips

Businesses should:

• verify sectoral cap before transfer,
• check FEMA pricing rules,
• obtain fresh valuation report,
• reconcile banking documents carefully,
• file within 60 days,
• maintain proper transfer documentation.

Proper FEMA compliance becomes critical during:

• startup funding,
• due diligence,
• acquisitions,
• investor exits.

Conclusion

FC-TRS is a mandatory FEMA reporting requirement for transfer of shares between resident and non-resident parties in India. The filing process on RBI FIRMS Portal involves registration, valuation compliance, document verification, and AD Bank approval.

Since RBI closely monitors foreign investment transactions, businesses and investors must ensure proper pricing, timely filing, and accurate documentation to avoid penalties and future compliance issues.

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